Our 12-month target price for ProKidney is $10, which is derived using a discounted cash flow (DCF) analysis. We use a weighted average cost of capital (WACC) of 12% and a -15% terminal growth rate post 2032. We note our model only accounts for the opportunity for REACT in US diabetic CKD patients with Stage 3 & 4. Our model does not account for the opportunity in EU diabetic CKD patients as well as for REACT in other types of CKD which could lead to significant upside in our estimates.

We rate shares of ProKidney as High Risk given the anticipated volatility in the stock price is consistent with small-cap biotech stocks. Should the clinical trial results for REACT fail to show clear and compelling clinical activity as well as safety, shares could meaningfully underperform our TP. We note that ProKidney is a pre-commercial company and holds financing risk typical of a development-stage company.